From rising interest rates to persistent inflation, middle-market organizations that are supply-chain-centric continue to face a number of mounting economic pressures.
In an effort to control cash, reduce costs and optimize cash flow — which, in the wake of the collapse of Silicon Valley Bank, is particularly important for businesses that rely on regional banks — many companies are turning to accounts payable (AP) automation tools to build a more efficient accounting function capable of doing more with less.
Large enterprises tend to be the early adopters of all technologies because their problems are usually bigger and cost more, so they stand to benefit the most. The good news is that AP automation technology is now mature enough that middle-market organizations can take advantage of solutions that are quick to implement, don’t require IT resources to manage and are easy to use.
By introducing AP automation technology to their operations, middle-market companies that rely heavily on supply chains can accomplish more than before — all while maximizing margins, getting control over finances and making suppliers happier.
Unprecedented Efficiency in AP
Companies that rely on supply chains typically operate on thinner margins. With so many invoices coming and going, supply chain companies have more motivation to automate transactions than companies in other industries.
Smart supply chain leaders always focus on building as much efficiency into their processes as they can. When you automate AP, you’ll automatically know things such as when invoices are on hold because goods haven’t shipped, when you haven’t received an advanced shipping notice, or when a receiving document hasn’t been generated, which enables you to operate much more efficiently.
But the efficiency benefits don’t stop there. With AP automation, employees no longer have to deal with paper invoices and physically load them into any system. As a result, what’s often a frustrating, unnecessarily time-consuming task is taken off the team’s plate, which makes life easier and helps the department reclaim time they can invest in other important areas of operations.
At the same time, leading AP automation platforms enable organizations to achieve 100% straight-through processing by eliminating invoice exceptions, the biggest source of headaches for AP professionals who do things by hand. With the right solution in place, you can automate the general coding process for invoices that aren’t attached to purchase orders (POs), and you can also automatically match PO-associated invoices to POs to accelerate payments. In other words, the process is as fast as it can be.
And the best part? All of this can be done without human intervention.
Add it all up, and AP automation enables teams to operate with unprecedented efficiency — something that’s critical in today’s tricky economic climate.
Deep Visibility into Cash Outflows
Due to concerns with banking, interest rates and inflation, companies today — and organizations that rely heavily on supply chains, in particular — need as much visibility into their cash situation as they can muster. This is another area where AP automation shines by providing complete transparency into all invoices and all payments.
Leading platforms enable organizations to automatically take advantage of every early payment discount available to them while withholding all other payments until they’re due to avoid late payment penalties. It’s an easy way to increase margins without workers being involved in the process.
Additionally, AP automation gives you visibility into when payments were made, which helps you know for certain that your supply chain partners aren’t waiting on checks to come in. Similarly, this visibility helps you mitigate potential AP errors, such as double payments and even invoice fraud, which helps your business further protect against economic pressures.
Empowered Supply Chain Partners
Due to the nature of the business, supply chain companies deal with higher transaction volumes than most other businesses. To keep the supply chain humming along, organizations rely on strong relationships with each partner they do business with.
For these reasons, supply chain managers need to do everything within their power to ensure their partners are happy. By empowering suppliers to check the status of their invoices through a supplier portal at their own leisure instead of trying to track down someone from your AP team, AP automation helps here too.
It goes without saying, but it bears repeating: Suppliers are critical to the success of any business that relies heavily on supply chains. Anything you can do to help strengthen the bonds you have with your supply chain partners is a no-brainer.
Build a More Resilient Business Today with AP Automation
It’s no secret that middle-market organizations are in a tough place. Money is getting tighter and more expensive, and budgets are dwindling.
While periods of economic uncertainty are challenging, they are also great opportunities to reassess your tools and processes and figure out where you can improve. As an investment that can return significant dividends, more and more supply chain companies are turning to AP automation to do more with less without compromising on quality.
Tough markets require businesses to adapt. As middle-market companies continue making the leap to AP automation, there’s only one question left to ask: When will yours?